Go to the Russian private label exhibition in March 2019!

Foreword

In On December 1, the heads of state of China and Russia met in Buenos Aires, Argentina. During the meeting, President Xi Jinping pointed out that the development of China-Russia relations conforms to the trend of the times and the common aspirations of the two peoples, and has strong endogenous momentum and broad prospects. This year, both sides have worked together to achieve a series of new results in cooperation in various fields. Next year marks the 70th anniversary of the establishment of diplomatic relations between China and Russia, which will be the main line of development of bilateral relations. Grand, lively, and diverse celebrations will be held to promote more tangible results in practical cooperation in various fields.

Main Characteristics of the Russian Market

Russia Land Area 17.1 million square kilometers, ranking first in the world. Spanning the Eurasian continent, stretching for more than 10,000 kilometers from east to west, it connects Western Europe in the west and the Asia-Pacific region in the east, linking the European Union, the United States, and Southeast Asia—the three most affluent, powerful, populous, and dynamic regions in the world today. Its strategic position is extremely important. Russia's important strategic resources such as oil, natural gas, timber, iron, and coal are all among the world's top ranks. Due to Russia's geographical location and its economic transition, the Russian market has a strong demand for mid-to-low-end goods. Russia is a country rich in natural resources, with a developed heavy industry and an underdeveloped light industry. More than half of its light textiles, daily necessities, and food need to be imported.

High Complementarity Between the Chinese and Russian Markets

In terms of overall trade, the Chinese and Russian markets are highly complementary. Many Chinese products are lacking in the Russian market, such as light industrial products, light industrial production equipment, and building materials. Many Russian products are also in demand in the Chinese market, such as some large-scale machinery products. For a long time, the trade volume between China and Russia has not been high. There are many reasons for this, one of which is that although the Russian market has high demand during economic recovery, its purchasing power is not strong. In addition, because China previously only exported low-end products to the Russian market, it led to a resistance to Chinese products among Russians. At the same time, exchanges and trade between China and Russia are asymmetrical, and the quality of personnel and trade level entering the Russian market are generally low, giving the impression of mostly small traders, or even small vendors.

Currently, the comprehensive recovery of the Russian economy has resulted in a huge Russian market capacity. Due to Russia's own development level, its demand for many Chinese products is strong. Of course, a promising market outlook does not mean that Chinese companies can successfully enter, as this involves a series of trade issues. For example, in the case of machinery and equipment trade, after-sales maintenance is very important; companies cannot simply sell things and be done with it. First, you must enter the market before you can talk about subsequent related services. For the Russian market, this includes participating in relevant industry exhibitions and promotional events held in Russia. This preliminary work is only the first step. Then there are contract signing, logistics, settlement, etc. Only by grasping all these links can the advantages of Chinese products be truly reflected.

Deep Cultivation, Avoid Superficial Involvement

Opening up the Russian market is fraught with difficulties, requiring domestic enterprises to truly delve into it rather than just superficially. Many domestic enterprises are currently interested in the Russian market, but often after attending an exhibition once, they feel there are no results and do not go a second time. There are many reasons for this. First, in terms of trade processes, many domestic enterprises do not have personnel familiar with the entire set of trade process operations for the Russian market. Second, the Russian market is still unfamiliar with many Chinese products, and domestic enterprises need to let potential Russian customers understand them, know how to use them, and maintain them, but they cannot rely on the help of Russians to complete this; the vast majority of the work still needs to be done by themselves. All this requires domestic enterprises to deeply understand the Russian market and be familiar with the trade operation processes and rules for entering this market.

One of the biggest problems facing the opening up of the Russian market is poor communication. Russian language talent is still relatively scarce in China. Even those who understand Russian mostly enter research institutions or universities; there are not many people who actually engage in physical trade, let alone Russian language professionals in specialized industries. For example, when exhibiting in Russia, many temporary first- or second-year Chinese students are hired locally, “Some can't even say ‘hello’ and ‘goodbye’ clearly, let alone professional technical conversations.”

In addition, many sample materials provided by Chinese companies contain many Chinese characters that Russians cannot understand at all, and can only guess based on the pictures. Finally, after returning to China, it is difficult to get in touch, but due to time differences, language, and a series of other problems, communication ends there.

There are many large Chinese companies in Russia, such as Huawei and Tiens. These companies mostly recruit people locally in Russia, including Russians and local Chinese students.

Currently, it is relatively costly for domestic companies to enter the Russian market alone. For example, for companies hoping to enter the Russian machinery and equipment market, if they complete everything alone, including setting up representative offices, showrooms, and after-sales service, it will require a high cost. The cost of manpower alone, the monthly living expenses of one person may be $2000. In addition, domestic companies are not only unable to complete more specific operations themselves, but sometimes they don't even know who to contact. If industry associations or relevant institutions bring together such supporting enterprises in China to jointly develop the Russian market, it will have a good effect, and the relevant costs will be greatly reduced.

Avoid Stereotypical Thinking

Many people in China have emotional evaluations of Russia and Russians, such as saying that Russians are untrustworthy or that the Russian business environment is poor. From a business perspective, businessmen in any country may be untrustworthy; Russian businessmen are no different from businessmen in other countries. Those people are definitely not the mainstream of Russian businessmen. Russian businessmen's trade habits are actually closer to those of Western countries; they attach great importance to contracts, and everything in trade is based on the contract.

In recent years, the Russian trade environment has been greatly improved, and social security has been significantly improved. The recovery of the national economy has improved people's living standards, and social security has reached a considerable level. Therefore, extreme nationalist sentiments have been controlled, although violent incidents occasionally occur, “The Russian business environment is currently good; domestic companies' views on Russia may be more of a stereotypical mindset.”

Russia Market Marketing Research Report

Introduction to Some Aspects of Daily Life in Russia:

Russians pay great attention to appearance, are very clean, and dress neatly. They always bring an iron when traveling. When attending parties or watching performances, Russians usually wear evening gowns, especially when watching ballet. It looks particularly elegant. Bring at least one suit or dress to wear on formal occasions.

Most major cities, such as Moscow, have long winters, so warm clothing such as fur and down jackets is essential. Leather boots or cotton shoes are recommended for winter. Summer temperatures are not high, but there are many cloudy days and frequent rain, so an umbrella is necessary, but a raincoat is not.

Food:

Russians mainly eat meat, dairy products, and noodles. Stores have a wide variety of sausages, dairy products, and semi-finished foods. Vegetables and fruits are expensive, especially in winter.

Russia has unique eating habits. There are three meals a day. Breakfast is simple, usually bread with ham, accompanied by tea, coffee, or milk. Lunch is much more substantial, typically consisting of three courses. Before the first course, there is a cold dish. The first course is soup; Russian soups are nutritious, containing diced potatoes, various vegetables, and meat or fish slices. The second course is meat or fish with side dishes. The third course is dessert and tea or coffee. According to Russian custom, the order of the dishes cannot be reversed.

Russians are known for their consumption of vodka. Bread and salt are used to welcome honored guests.

Hotels follow European customs and do not provide slippers. Guests need to bring their own toiletries, such as toothbrushes and soap. Hotels do not provide hot water; guests should bring their own electric water heaters. The power plugs are cylindrical two-prong plugs, with a voltage of 220V.

Overview of the Russian Economy:

The national economy has a strong foundation and enormous economic potential. Industry, agriculture, and transportation have reached a considerable level of development. The industrial base is strong, with machinery, steel, non-ferrous metals, oil, natural gas, coal, forestry, and chemicals as the main industries. Energy, textiles, and military industries are also well-developed.

Internet Usage in Russia:

The number of internet users in Russia is approximately 30 million, accounting for 20% of the total population, and is increasing at a rate of 35% per year. Internet access fees in Russia are relatively expensive, browsing foreign websites is slow, and the strong nationalistic sentiment among Russians means that the viewership and usage rate of local Russian-language websites are much higher than those of foreign websites, especially in the search engine sector.

Analysis of Chinese Enterprises Exporting to Russia

For Chinese enterprises, Russia is a virgin land with enormous potential. This is especially true when the economic crisis and market weakness caused by the subprime mortgage crisis in China's traditional major foreign trade markets, such as the United States and the European Union, have significantly reduced the willingness and volume of purchases from buyers. The rapidly developing Russian market is therefore even more valuable. Based on the current overall economic situation, economic structure, and natural resources of Russia, we can analyze the foreign trade prospects of various domestic industries exporting to Russia.

Home appliances, furniture, daily consumer goods

With the improvement of living standards in Russia, more electronic products and home appliances are gradually entering ordinary households. For young people, lightweight electronic products are even more popular. For example, in the Mega-1 shopping mall in southern Moscow, consumers buy daily necessities at the French Auchan supermarket; they buy furniture at the Swedish IKEA; and dozens of specialty stores sell various goods ranging from Yves Rocher cosmetics to CK underwear. For Chinese companies that want to establish their brands overseas, the Russian market is an excellent testing ground. Without investing too much capital, by identifying the appropriate consumer groups, they can operate their overseas brands in the same way as they operate their domestic brands. In particular, companies with franchise sales models can find a huge market in Russia, because for Russians, all brands are new, and they do not have much brand loyalty for products other than luxury goods. Suitable companies include home appliance manufacturers, furniture manufacturers, furniture parts manufacturers, and various daily consumer goods manufacturers.

Increased Demand for Chinese Goods in the Russian Market

It is worth mentioning that the structure of Chinese exports to Russia has undergone significant changes. Since the 1990s, China has mainly exported textiles, clothing, shoes, and home appliances to Russia. Since 2006, machinery and electrical products have become the largest category of Chinese exports to Russia. The imbalance in the Russian economy, with its overemphasis on heavy industry and underdevelopment of light industry, was formed during the Soviet era. After the collapse of the Soviet Union, Russia has been in a state of political turmoil and economic crisis. Since 1998, the Russian economy has seen a recovery, and the adjustment of machinery and the development of production have become the mainstream of economic life. The market for plastic processing machinery, printing machinery, food processing machinery, packaging machinery, and other light industrial machinery is heating up. Russia's domestic production capacity for these equipment is very weak, so it mainly relies on imports, and the market is vast.

Chinese Home Appliances are Popular

It is understood that the home appliance market in Russia is dominated by LG, Panasonic, Siemens, and Philips. Compared with products from other countries, the biggest advantage of Chinese home appliances is their low price and high quality.

It is reported that the barriers to entry into the Russian market are not high, and the market potential is huge. Russia's developed financial credit business also provides financial support for residents to buy goods on credit.

Analysis of Russian Consumer Characteristics

The Russian market structure is complex, and there are many uncertainties. The gap between rich and poor is large, the ethnic composition is complex, and the consumption levels are diverse, making market orientation difficult. Due to misunderstandings, some domestic and Western companies believe that the Russian consumption level is low and export stagnant and obsolete goods to the Russian market. Their mistake is in treating the Russian market as an underdeveloped country's market, failing to notice that the former Soviet Union, whose main body was Russia, was a superpower parallel to the United States. Russian consumers have high requirements for product selection and are very picky. Russian consumers like to pursue famous brands, and they are willing to buy them even if they are expensive. There are two main reasons for this situation: firstly, Russians generally have a high level of education and want to buy famous brands that match their status. Secondly, Russians are relatively modernized in terms of housing and cars, and they invest their main income in food, home appliances, clothing, and durable consumer goods.

Points to Note for Chinese Exporting Companies Entering the Russian Market

Characteristics of the Russian Market:

The level of English proficiency is very low. Most telephone lines are shared with fax lines, requiring a telephone call before sending a fax, which creates significant communication barriers. In addition, to avoid wasting paper on fax advertisements, most Russian businessmen turn off their fax machines after work. Other factors, such as the remote location of raw material factories, make communication extremely inconvenient and often affect the completion of transactions. In recent years, the Russian government has strengthened English teaching, with optional courses available from the fourth grade of primary school. The younger generation has a high level of English proficiency, and it should not be difficult to find Russian-English interpreters in various cities.

An important sales channel for daily consumer goods is the market. Its turnover accounts for 33% of the total retail sales. In Moscow, there are 223 "Big Markets," of which 21 are state-owned and 202 are privately owned. As for modern large chain stores, they are in the initial stage. It is expected that in the next ten years, under the condition of continuous stable political and economic development, the number of large chain stores will grow rapidly. It should be noted that in recent years, Russian consumer awareness has significantly improved, and cheap goods are gradually becoming unpopular. This has changed from the situation in the early 1990s when consumers bought whatever they could get, due to the increasing demand for quality. For example, since May 1, 1997, all food imported into Russia must be labeled in Russian.

Methods for Expanding the Russian Market

1. In order to understand market demand and find suitable partners, Chinese electromechanical manufacturers can participate in international trade fairs held in Russia, using image displays to enhance the popularity of Chinese electromechanical products.

2. Russian businessmen usually conduct business talks at a slow pace, but after gaining trust, they can usually establish long-term relationships. Chinese manufacturers' negotiations must carefully examine their subsequent potential; if necessary, they should "cast a long line to catch a big fish."

3. Chinese manufacturers must establish the concept of "quality first" for the Russian market, because Russians attach great importance to quality. If the Russian importer can come to China for inspection before shipment, this can avoid endless disputes in the future. In order to maintain reputation, Chinese electromechanical manufacturers should pay attention to the printing of instructions and the supply of parts when exporting machinery. 2019 Russia's Own Brand Exhibition: Adding luster to the 70th anniversary of China-Russia diplomatic relations!